@Carl,
Thank you for your reply.
I went round-n-round with this while doing my 2010 taxes after I put the property back into rental status, so what you say makes sense for what I determined at that time (I did it wrong to begin with and had to amend the 2010 return later that year).
I understand and agree on the Depreciation Recapture (tax) and fully expected that to occur. I paid estimated taxes of 25% of $51,196 to cover this following the sale last year (though it looks like it should have been 25% of $32,377). My fundamental question (after clearing up the prior depreciation issue) is "What should I expect to be Section 121 exempt for this sale?" My gut tells me that it should be: Sale Price - Final Rental Period Basis - Final Period Depreciation - Allowable Sales Expenses with the Final Period Depreciation being recaptured as well. This is because we lived in the house from 2006 through late 2010 when we departed and were on Qualified Extended Duty until Dec 31, 2018. We sold the house almost exactly 1.5 years later. I am working through the Pub 523 to prove/disprove myself, but welcome your insights.
This topic is very confusing (no thanks to my situation) in TurboTax. I can get about a half-dozen different results based upon answers I give which can seem right. For example, one of the T-Tax results had me allocate the sale price between Home and Land. It was treating the Land gains and the Home gains individually and that was causing the Capital Gains tax on Form 4797 for the Land (this is why I was inputing the tax value of the land).
If you don't mind, I have related questions because the dialog in T-Tax is not clear and does not match the Pubs at times:
Following the "Disposition Information" (Sale: 6/26/2020, Acquired: 2/11/1993), the next page is "Special Handling Required?" . Only the first and last lines seem to potentially apply:
1st: "The business use percentage of this asset varied during the years you owned the asset." To me, this could mean "varied during the years you owned it AS A BUSINESS asset" and the answer would be NO, or it could be "varied during the years you owned it (since purchase)" and the answer would be YES. What is the right interpretation?
Last: "This asset was a rental, a home office, or a home office improvement within a home". Selecting the "Learn More" give notes about "the portion of the home used as a rental ..." so it makes me think I should read the original statement as "This asset was a rental WITHIN A HOME, a home office WITHIN A HOME, or a home office improvement within a home" and answer NO. Does this make sense?
Cheers
